FDIC: Bank closures slow and loan portfolios grow

Banks insured by the Federal Deposit Insurance Corp. added $64.4 billion in total loans and leases, a 0.9% increase from the previous quarter and the first growth in three years.
Loans of all types increased in the second quarter, according to the FDIC quarterly banking profile released Tuesday. Mortgages showed the lowest growth, up 0.2% from the previous quarter, but given the still lingering struggles and regulatory uncertainty in the industry, FDIC Chairman Martin Gruenberg said it was significant but tempered his optimism.
"At the same time, a significant portion of the overall growth in loans represented intercompany lending between related banks," Gruenberg said. "Lending activity still has a long way to go before it approaches normal levels."
The number of problem banks monitored by the FDIC dropped for the first time since the third quarter of 2006. The FDIC reported 865 problem institutions on the list, down from 888 in the previous quarter.
There have been 68 bank failures so far this year, nearly half of the 119 closed at this point in 2010.
Loan-loss provisions totaled $19 billion, a 53% decline from one year ago and the seventh-straight quarter of decreases. Delinquent loans at the banks reached $319.8 billion, a 6.5% drop as well.
For the second quarter, banks earned a collective $28.8 billion. While net income increased 37.9% from one year ago, revenues declined for the second consecutive quarter, dropping by almost $2 billion, according to the FDIC.
"Recent events have reminded us that the U.S. economy and the U.S. banks face serious challenges ahead," Gruenberg said.
Write toJon Prior.
Follow him on Twitter @JonAPrior.

This month inHousingWire magazine

While other state and federal regulatory bodies overlap in their regulation of the mortgage industry, the very particular consumer focus of the CFPB is not duplicated by any other body. Will deregulation mean a return to the Wild West lending atmosphere that led to the financial crisis? What happens next? We asked John Socknat, partner at Ballard Spahr, to weigh in on what mortgage lenders and servicers can expect from a Trump administration.

Feature

Amid the potential new direction from the White House, Congress and regulators, leadership in our industry is more important than ever. Which is why HousingWire is proud to present the 40 winners of our 2016 Vanguard award. These leaders from all segments of the mortgage ecosphere demonstrate that our industry is more than capable of meeting the challenges that lie ahead.

Commentary

The marketplace is full of hard and private money lenders — it will come down to who can best assist investors in completing their goals, whether that be by providing quicker close times, or with more accurate valuations. With how many options there are for borrowers, lenders will need to start competing for marketshare as borrowers shop their situations to multiple lenders, leveraging the offers against each other. This process will force lenders to update their guidelines, or be forced out of the market.